Top tips to reduce spending

• Get your financial information together

  You’ll need to gather together all of your financial information including: 1) your regular household bills (council tax, gas, electricity, phone, internet), 2) your living costs (food, toiletries, prescriptions, clothing) 3) any insurance policies you have (home insurance, pet cover) 4) your travel expenses (car costs, bus fares) 5) your leisure costs (gym membership, cinema trips) 6) any debts you have (loans, credit cards).

• Calculate your income

  Your income is the money you receive each month from any work you do, as well as from benefits, pensions, investments, or money from partners or relatives.

• Calculate your regular spending

  Look at what you spend every month across various categories such as housing costs, travel costs, housekeeping, food costs, clothing, leisure and entertainment.

• Don’t forget to budget for one-off expenses

  One of the aims of creating a budget is to plan your spending thoroughly. Do you need to pay for a large one-off expense later in the year such as a car service, or a repair to your home? Make sure you add this to your budget. You can do this by taking the amount you’ll need for the one-off expense, then dividing it by 12 and adding it your monthly budget. You then put this amount aside every month. Putting it in a savings account away from your day-to-day bank account can help you avoid dipping into it.

• Check if you have a ‘surplus’ or ‘deficit’ budget

  Once you’ve added together your monthly income, and taken away your outgoings – have you got money left over? If you do, this is called a ‘surplus’. You should use this to pay towards any debts you might have, or add this to a savings account. However, if you’re spending more than your total income each month you have what’s called a ‘deficit’ budget. Spending more than you have coming in means that you’re at risk of getting into financial difficulties.

• Put money aside

  If your budget allows, you should put money aside each month into a savings account. It’s a good idea to have one for larger, planned one-off purchases, and another for creating an ‘emergency fund’. Having some ‘rainy day’ savings can help you avoid getting into debt if you have an income shock such as redundancy or illness.

• Track your spending

  It can be helpful to carry a small diary or use a budgeting app to keep track of your spending. It’s easy to forget small purchases, but they soon add up! Tracking your spending helps you understand where your money goes, but it can also affect how you spend your money too. Writing down every penny you spend may make you less likely to splurge on something you don’t need.

• Look for ways to save

  In almost every budget there may be opportunities to save a little more money. Ask yourself if you could: Move to a cheaper phone/text/data tariff? Switch to a cheaper TV package? Save money on your insurance by comparing deals next time it’s up for renewal? Making these reductions could free up valuable extra money to help you keep on top of your household bills or boost your savings.

• Review your budget regularly

  Once you’ve started to budget effectively, you should review your spending regularly. There’s no set time to do this, but it’s worth checking every few months.